Feast or famine investments

One-time diet wonders may not be healthy for portfolios, so carefully consider the long-term viability of any product before buying stock.

February 19, 2006|By Andrew Leckey, Tribune Media Services

It's the time of year when the crowd at fitness centers decreases, as New Year's resolutions to exercise become less resolute. Yet our nation's preoccupation with health and diet will affect the corporate bottom line all year.

U.S. companies survived "low-carb" wars that rocked menus, grocery shelves and stock prices, but new trends are relentless. Here's the early 2006 financial health watch:

An eight-year study of postmenopausal women found a low-fat diet doesn't cut rates of colon cancer, stroke, heart disease or breast cancer. But the study added it didn't condone a high-fat diet either, much to the relief of food companies touting low-fat products.

Regularly eating fish high in omega-3 fatty acids like tuna and salmon doesn't decrease the risk of cancer, according to another study. But it added this doesn't undermine health benefits of fish, which is good news for fisheries and seafood restaurants.

Two advocacy groups notified Kellogg Co. and Viacom Inc. -- owner of the Nickelodeon network -- that they plan a lawsuit over food marketing to children. It won't aim at products considered nutritionally poor, but what they deem unfair and deceptive advertising of them.

Dentists charged bottled water doesn't contain enough fluoride to prevent tooth decay. Several beverage companies have moved to add fluoride to brands aimed at children.

PepsiCo Inc.'s "healthier" products such as Baked Lay's potato chips, Quaker oatmeal, diet soda, bottled water and Gatorade were largely responsible for its 12 percent profit increase in its most recent quarter.

Diet drugs are important profit centers. A regulatory panel supported GlaxoSmithKline PLC's request to sell the weight-loss drug Orlistat without a prescription.

In a trend sweeping Japan, the "kanten" diet features gelatin made from ground-up seaweed that makes your body feel full. Sold in powder and food, it has no calories, but lots of fiber, calcium and iron.

The problem for investors in companies opting to cater to the health-conscious is that fads and negative publicity have a strong influence.

One research study can whack profits and stock of a company or send it retooling its corporate strategy or product line.

Realistically consider the long-term viability of any health-related food or drug when assessing a stock. View cautiously any firm that ties its fortunes to one specific health advantage or trendy product.